Kenedix Residential Investment Corp. (3278), the first Japanese real estate investment trust to sell shares in more than four years, fell on the first day of trading in Tokyo on concerns that its property holdings are too small.
The shares fell 4.7 percent to 181,000 yen at the close on the Tokyo Stock Exchange, compared with the IPO price of 190,000 yen. The Tokyo Stock Exchange REIT Index lost 1.1 percent.
The IPO is the first for a Japanese REIT since Industrial & Infrastructure Fund Investment Corp. (3249) sold shares in October 2007. Others including Japan Real Estate Investment Corp. (8952) and Nippon Building Fund Inc. (8951) have announced plans this year for public offerings to fund property acquisitions and pay down debt.
“Kenedix’s portfolio is very small and not as competitive,” Yoji Otani, an analyst at Deutsche Bank AG in Tokyo, said. Still, “Kenedix’s performance shouldn’t discourage other companies from going public.”
Kenedix’s REIT will manage 30.5 billion yen ($375 million) of rental apartments mainly in the Tokyo metropolitan area, according to a filing with Japan’s Ministry of Finance on March 23. That compares with 231.9 billion yen of apartments that Nippon Accommodation Fund Inc. owns in its fund and Advance Residence Investment’s REIT with 341.8 billion yen of assets.
J-REITs are selling shares on expectations for a recovery in property prices and as the Bank of Japan said it added 10 trillion yen to an asset-purchase program on Feb. 14. The monetary easing will help boost land prices in the six major cities by 10 percent, Otani said.
They may sell as much as 500 billion yen worth of shares through secondary offerings in 2012, compared with the 223.8 billion yen they sold last year, according to an estimate by Otani.
Global Logistic Properties Ltd. (GLP), a unit of the Government of Singapore Investment Corp., is preparing an initial public offering of its Japanese warehouse assets that may raise about $1 billion, said three people with knowledge of the matter in March.